- A survey of 571 college graduates from 2006-2010 found that nearly 6 in 10 borrowed for college, averaging $20,000 in debt. Four years after graduating, 83% still owed at least half of what they borrowed and 30% had not paid off any debt. - Starting salaries for graduates averaged $30,000 but were lower for those graduating in 2009-2010 during the recession. Many graduates expected to need more education to succeed but saw this increasing their debt burden further. - Given high debt levels and low salaries, recent graduates have struggled to pay off loans after college. This is expected to continue affecting default rates and financial stability for years.

1. Roundtable Discussion on the Implications
of Student Loan Indebtedness
Information compiled for Federal Reserve Board,
Division of Consumer and Community Affairs
Prepared by Carl Van Horn, Ph.D.
vanhorn@rutgers.edu
Professor and Director
John J. Heldrich Center for Workforce Development
www.heldrich.rutgers.edu
Summary of Findings from:
Unfulfilled Expectations: Recent College Graduates Struggle in a Troubled Economy, by Carl E. Van Horn, Cliff Zukin, and Jessica
Godofsky, Heldrich Center for Workforce Development, Rutgers University
A national random survey of 571 individuals who received a B.A. or B.S. degree from 2006 to 2010. Conducted in April/May 2011.
Available at: http://bit.ly/iijwR4

2. Roundtable Discussion on the Implications of Student Loan Indebtedness
2
KEY FINDINGS: UNFULFILLED EXPECTATIONS: RECENT COLLEGE
GRADUATES STRUGGLE IN A TROUBLED ECONOMY
1. PROFILE OF STUDENT DEBT
Nearly 6 in 10 borrowed for college.
Main source of funding is from non-family sources (37%).
Nearly 6 in 10 owed money at graduation.
$20,000 was the median amount owed.
Median public college debt was $18,680; median private college debt was $24,460.
Four in ten (42%) have other debts—mainly credit cards.
2. PROGRESS IN PAYING OFF DEBT 1 TO 5 YEARS AFTER GRADUATION
83% owe at least half of what they borrowed for college.
Nearly a third (30%) has not paid off any debt.
About half who graduated in 2009 and 2010 have yet to pay off any of their debt.
44% have paid off one-quarter of the debt.
Only 12% paid off all of their debt.

3. Roundtable Discussion on the Implications of Student Loan Indebtedness
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KEY FINDINGS: UNFULFILLED EXPECTATIONS: RECENT COLLEGE
GRADUATES STRUGGLE IN A TROUBLED ECONOMY (continued)
3. COLLEGE STUDENTS’ CONTRIBUTIONS TOWARD THEIR COLLEGE EDUCATION
83% of graduates worked during the school year; 92% worked full or part time in the summer.
23% of college students worked full time during the school year; from 2006 to 2010, the percentage
working full time increased from 16% to 27%.
44% contributed toward their college education through work or personal savings (51% of males
and 39% of females)
4. PARENTS AND FAMILY ARE PROVIDING A LOT OF SUPPORT TO RECENT COLLEGE
GRADUATES
58% of recent college graduates between the ages of 22 and 25 and 35% of those between the
ages of 26 and 29 receive some form of financial assistance from parents or family members,
including:
 housing (24%), including 22% living with
parents or relatives
 paying bills (24%)
 food (21%)
 health care costs (15%)
 college loans (11%)
 car payments (9%)

4. Roundtable Discussion on the Implications of Student Loan Indebtedness
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KEY FINDINGS: UNFULFILLED EXPECTATIONS: RECENT COLLEGE
GRADUATES STRUGGLE IN A TROUBLED ECONOMY (continued)
5. EARNINGS OF RECENT COLLEGE GRADUATES
Median salaries earned in the first job were $30,000.
Men earned a median of $33,150 and women earned $28,000.
Median starting salaries were $30,000 for 2006 and 2007 and $27,000 for those entering the
workforce in 2009 and 2010.
Employed graduates who did an internship in college had a median income of $34,680—$6,680
more than those who did not do an internship ($28,000).
Students earning less than $20,000 per year were more likely to have borrowed money from non-
family sources (42%) than those earning $50,000 or more (30%).

5. Roundtable Discussion on the Implications of Student Loan Indebtedness
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KEY FINDINGS: UNFULFILLED EXPECTATIONS: RECENT COLLEGE
GRADUATES STRUGGLE IN A TROUBLED ECONOMY (continued)
6. EMPLOYMENT AND EDUCATION STATUS OF RECENT COLLEGE GRADUATES
While 80% of graduates have had at least one full-time job since graduation, at the time of the
survey:
 53% employed full time
 7% employed part time, seeking full-
time work
 5% employed part time, but not looking
for full-time work
 3% self-employed
 2% military service
 7% unemployed and looking for work
 2% unemployed and not looking for work
 21% attending graduate/professional
school, full or part time

6. Roundtable Discussion on the Implications of Student Loan Indebtedness
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KEY FINDINGS: UNFULFILLED EXPECTATIONS: RECENT COLLEGE
GRADUATES STRUGGLE IN A TROUBLED ECONOMY (continued)
7. EXPECTATIONS ABOUT THE NEED FOR FURTHER EDUCATION
79% of graduate students in 2010-2011 took out federal loans, according to the College Board.
62% expect that they will need more formal education in order to be successful; 18% are not sure.
57% of whites and 77% of non-whites say they will need more education.
52% of 2006 graduates and 71% of 2010 graduates say they will need more education.
8. EXPECTATIONS ABOUT FINANCIAL SUCCESS AND THE ECONOMY
Less than half (48%) think they will have more financial success than their parents; 20% think they
will have less success than their parents.
17% think their generation will have greater financial success than the one that came before
them; 56% think their generation will have less success.
45% think that the U.S. economy is experiencing fundamental and lasting changes.

7. Roundtable Discussion on the Implications of Student Loan Indebtedness
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IMPLICATIONS
1. Recent college graduates will continue to struggle to pay off their debt due to:
2. Reduced entering salaries for those graduating during the recession will present continuing
difficulties for this group of borrowers and increase default rates.
3. Because graduates who earned lower salaries in their first jobs were more likely to have
borrowed from sources other than their families, they will also struggle to pay off their debts.
4. Lower entering salaries for women college graduates will cause difficulties for the ability to pay
off debts.
5. Debt burdens for college graduates will increase in the coming decade as even larger numbers
of students already in debt go further into debt in order to finance graduate and professional
education.
6. Because most students are already contributing substantially toward their education by working
full time or part time during college, there is little they can do to reduce borrowing.
 Ratio of median debt to median entering salaries
 Relatively low levels of full-time employment

8. Roundtable Discussion on the Implications of Student Loan Indebtedness
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CONCLUSION
Strategies need to be developed to:
 Respond to the special problems encountered by recession-era recent college graduates.
 Anticipate additional borrowing by students seeking graduate and professional degrees in the
coming decade.
 Lower the cost of undergraduate education by reducing the amount of time spent in certificate
or degree completion.